YAMANA GOLD INC. announces that it has completed the sale to Premier Gold Inc.
OREANDA-NEWS. YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY) ("Yamana" or the "Company") announces that it has completed the sale to Premier Gold Inc. ("Premier") of its Mexican subsidiaries through which the Mercedes mine is held. Pursuant to the transaction, the Company received total consideration of $122.5 million in cash plus shares, equity securities and net smelter return royalties having an additional value of approximately $22 million. The marketable securities received include 6 million common shares of Premier and 3 million common share purchase warrants of Premier that are exercisable at C$4.75 per common share for 24 months. The Company also received a 1.0% net smelter return royalty on the Mercedes mine, that becomes payable upon the earlier of six years from the completion of the sale and the date upon which cumulative production of 450,000 ounces of gold equivalent from Mercedes has been achieved, as well as a 2.0% net smelter return royalty on the La Silla property in Sinaloa, Mexico and the La Espera property in Sonora, Mexico.
In addition, Yamana has also sold share purchase warrants to purchase 15 million shares of Sandstorm Gold Ltd. ("Sandstorm") for total net proceeds of approximately $33.55 million, or approximately $2.24 per warrant. The warrants have an expiry date of October 27, 2020 and are exercisable at a strike price of $3.50 per share. The closing price of Sandstorm on September 23, 2016 when the sales were priced was $5.06 per share implying an in-the-money value for the warrants of approximately $1.55 per share at that time. The warrants were originally issued as part of the consideration for certain metal purchase arrangements relating to copper and silver entered into with Sandstorm in 2015.
In total, these transactions have provided approximately $156 million in cash which will be used to reduce net debt. The Company continues to hold marketable securities and net smelter return royalties from these transactions having an additional value of approximately $22 million. The Company will evaluate over time the merits of monetizing these securities for further debt reductions.
One of the Company's announced objectives in early 2016 was to reduce net debt by $300 million in a two year period through 2017. The Company also announced that it intends to achieve a leverage ratio below 1.5 over time. The Company is well ahead of schedule on both objectives and expects that cash balances will continue to increase, and net debt will continue to decrease, organically as a result of increased margins at current gold and silver prices.
About Yamana
Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties, and land positions throughout the Americas including Brazil, Argentina, Chile, and Canada. Yamana plans to continue to build on this base through existing operating mine expansions, throughput increases, development of new mines, the advancement of its exploration properties and, at times, by targeting other gold consolidation opportunities with a primary focus in the Americas.
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